OUTLOOK: The Chubb Review – Australian carbon offset price, supply and demand outlook

At the end of December, the Independent Review of Australian Carbon Credit Units (ACCUs), led by Professor Ian Chubb (the Chubb Review), will provide advice to the government on Australia’s carbon crediting framework, including the integrity of key carbon farming methods and current governance arrangements.

The Review was announced in response to criticism from former Chair of the Emissions Reduction Assurance Committee (ERAC), Professor Andrew Macintosh, that credits generated under Human Induced Regeneration (HIR), Avoided Deforestation (AD), and Landfill Waste Gas methods do not represent “real and additional” abatement.

In recent weeks, some stakeholders have suggested that any move to restore integrity to the ACCU market would lead to a marked reduction in ACCU supply, triggering a sharp increase in ACCU prices and associated compliance costs under the Safeguard Mechanism. This prompted calls for a price cap under the Safeguard Mechanism to protect industry from the impacts of a faster ‘transition to integrity’.

While potential remains for the Chubb Review to trigger a material contraction in ACCU supply where radical changes are implemented, analysis indicates that a more nuanced impact on the supply landscape may be likely, with possible reductions in crediting expected to be offset by the annual growth